Reference no: EM132165815

In employing a low cost provider strategy a company must do better job than rivals of cost effectively managing internal activities and or it must find innovative ways to eliminate or bypass cost producing activities. particular attention should be paid to cost drivers which are factors having a strong effect on the cost of a company value chain activities and cost structure. low cost provider strategies work particularly well when price competition is strong and the products of rival sellers are very weakly differentiated. other conditions favoring a low cost provider strategy are when supplies are readily available from eager sellers when there are not many ways to differentiate that have value to buyers when the majority of industry sales are made to a few large buyers when buyer switching costs are low and when industry newcomers are likely to use a low introductory price to build market share.